A 25-year-old Stratford woman struggling to pay off her student debt has been hit with a $15,000 tax bill by the Canada Revenue Agency over her tips.
Anita Casey is one of dozens of servers with the Murphy Hospitality Group who received letters three weeks ago saying they were being audited over their tips, retroactive two years.
“It’s pretty crazy that they’re coming after the poor young population who are in school and just trying to support themselves,’’ Casey told The Guardian.
Casey completed a four-year bachelor degree in Halifax before she started working at the Gahan House in Charlottetown full time through 2015 and 2016 and halfway through 2017. She’s now in the one-year bachelor of education program at UPEI.
“I was working full time and I actually claimed a good portion of my tips, but I still got dinged pretty hard. I lived in Halifax so I had my rent, my car, my phone, I had my student loans on top of that from four years, so it was quite a bit.”
She realizes servers are supposed to claim their tips, but argues tips should be considered a “gift” for good service.
“If a professional is given a bottle of liquor at Christmastime and it costs $200 they’re not getting taxed on that liquor, so why are we getting taxed on gifts that we’re given for good service?”
“If a professional is given a bottle of liquor at Christmastime and it costs $200 they’re not getting taxed on that liquor, so why are we getting taxed on gifts that we’re given for good service?”
-Anita Casey
Ben Murphy, chief operating officer with the Murphy Hospitality Group, isn’t impressed at all that his employees have been targeted.
“It’s been a rule for X amount of years or whatever, but to go retroactive and start enforcing it two years ago?” Murphy said. “A lot of these people are paying their way through school or paying off their student loans.”
Murphy said many of his servers have been hit with bills into the thousands of dollars.
“I know a few of them are in law school now . . . and have hundreds of thousands of dollars of debt and now the CRA want to come after them? I think that’s a little bit much. I think it’s totally unfair to go after these hard-working people who are essentially grinding it out at the start of their careers.”
Murphy said his servers are the only employees in Charlottetown that were hit with an audit, but he knows of at least two companies in Halifax that have experienced the same thing over the past couple of years.
At least 50 Murphy’s employees have taken their concerns to Charlottetown MP Sean Casey, but Casey said he is powerless to do anything about it.
“The Canada Revenue Agency is independent of government and operates at arm’s length of government. Elected officials cannot direct them who to audit and who not to audit,” Casey said. “It would be tantamount to interfering in a criminal investigation, (like) calling up the RCMP and saying, ‘Leave this guy alone.’”
Poll: Do you think servers should have to claim their tips with CRA?
Casey said he has great empathy for the employees. He says conversations he’s had with a number of workers have been difficult.
“People are extremely upset. You’d like to be able to cast a wand and fix it for them. It’s a very difficult conversation to have . . . part of the reason why they’ve been difficult is, quite frankly, people don’t believe me when I tell them that (Prime Minister) Justin Trudeau cannot stop this audit.”
Casey suggests people co-operate with the CRA.
“CRA does have a discretion to reduce or waive penalties or interest, so a fulsome presentation of your financial situation (is necessary).”
Casey said he has raised the issue with Trudeau and the minister of National Revenue, but was told the federal government can’t do anything.
Anita Casey said she will be sending a letter to the Charlottetown MP as well.
“How do you expect us to pay it back when it’s hard enough to get a job in P.E.I. that’s good paying?” she asked. “What do you do?”
In response
The following is the Canada Revenue Agency’s response to this story:
“As the protection of the taxpayer's information is of utmost importance, the confidentiality provisions of the Income Tax Act prevents the Canada Revenue Agency (CRA) from discussing the details of specific cases.
"The CRA is committed to protecting and maintaining the fairness and integrity of Canada’s tax system for all Canadians, with a balanced approach of education and compliance. The CRA works with Canadians, through education and outreach, to inform them of their tax obligations.
"Individuals must report all income earned, and comply with any tax reporting requirements, like any other Canadian. The CRA is aware that reviews may prove challenging to individuals affected and works with them on finding solutions.”
